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"Learn about the
hurdles most companies face during the
ERP selection process, and what you can do to avoid them."
Source : VEITS Group
5 Common Hurdles during the ERP Selection Process
and how you can avoid them
ERP Selection Process is also known as:
ERP Selection Tips,
Select a ERP system,
ERP Evaluation,
ERP Evaluation and Selection,
ERP selection criteria,
ERP selection checklist,
ERP process implementations,
Choosing ERP systems,
Pick ERP systems.
Abstract
This whitepaper discusses typical challenges that many companies face during
their ERP Selection project and demonstrates proven steps on how you can
overcome them.
ERP Selection Background
With so many different solutions on the market, each offering a countless
number of unique attributes, sorting through them and selecting the right
solution for your organization can be an extremely time-consuming and even
daunting task. In fact, according to a recent study by The Wall Street Journal,
73% of all manufacturers are dissatisfied with their current ERP systems.
However, following a clearly defined selection process and learning from others'
mistakes can drastically improve your chances of success.
ERP Selection Key Steps
Based on our experience in helping clients select the right enterprise
software for their business, there are 5 common steps in the ERP Selection
process. These steps are:
- Define your critical product requirements
- Develop a focused-list of solutions
- Analyze vendor's strengths and weaknesses
- Determine which solution is best for you
- Contract Negotiations
5 Common Hurdles During the ERP Selection Process
The Standish Group International Inc. reports that more than 80% of software
projects are unsuccessful in objectively defining requirements.
According to a recent study by The Wall Street Journal, 73% of all
manufacturers are dissatisfied with their current ERP systems
•Focusing on the Critical Functionality
It's easy to get caught up in the "wishlist" features of a product. In fact,
The Standish Group International Inc. reports that more than 80% of software
projects are unsuccessful in objectively defining requirements. In order to get
the vital functionality requirements, a company must get key people to document
detailed scenarios of their critical business processes that the vendor's system
must absolutely be able to handle. Once a comprehensive list of these scenarios
has been developed, utilize them to keep your organization on track and focused
during the selection process, and as a comparison tool for vendors.
•Checking References (The right way)
Simply asking for references from the vendor and checking to make sure the
references are satisfied is a recipe for failure! In order to prudently
check references, an organization must ask the vendor to provide you with a
reference you can physically visit, that are in your marketplace, similar in
number of employees and users, are located in close proximity, have similar
functional and technical requirements, and that have been using the specific ERP
software for at least 1 year. Following these simple suggestions will
demonstrate to you whether you can expect to receive a high level of support
from a particular vendor for your geographic location. Furthermore, it will give
you a clearer picture of the software since the company will have already gotten
past the learning curve and hiccups. Lastly, not only will it enable you to
visit customers that are like you; but it will also handcuff the vendor from
giving you their best customers
•"Paralysis by Overanalysis"
Selecting an ERP Solution is one of the most critical decisions a business
can make. However, overanalyzing and over thinking will cause your information
to become outdated and the selection process to lose momentum and even possibly
come to a screeching halt. In order to avoid facing this problem, prior to
beginning the selection process, the ERP evaluation team must develop a specific
and realistic time-line of objectives, goals, and deliverables. Without
outlining a clear path and on how or when to move forward, the ERP selection
process may take longer than it should and possibly expose the business to
unnecessary additional risk.
•Putting Together an Effective Evaluation Team
An ERP Selection project is not an IT decision; it is a business decision. As
a result, in order to identify the right solution for the business, a team must
be formed that represents all functions of the business. Furthermore, in order
for an evaluation team to be successful, there needs to be one manager chosen to
be accountable and responsible for the success of the team. This person should
have the authority to make decisions and be a bridge to upper management. In
addition, key top management people and evaluation team members should look out
for those who want to select a solution simply because they have used a solution
in a previous job or are just more familiar with the package.
•Negotiation
Prior to beginning the negotiation process, your organization has to outline
the desired goals of the negotiation. Unfortunately, many organizations skip
this step and their only goal is to squeeze every last dime and get the lowest
absolute price from the vendor. This tactic and lack of strategy may save
up-front costs, but in the end may cost you much much more! Partnerships work
best when both parties have an interest in seeing the other one succeed and it's
a win-win scenario. In the negotiation stage, rather than solely focusing on
paying the lowest amount, your firm should focus on simply getting a fair deal
so that the vendor has the necessary resources to provide you with quality
support over the life of the product.
Conclusion & Key Points to Remember
In conclusion, selecting an ERP Solution is one of the most critical and
expensive decisions your organization will have to make. You will face many
challenges, and it will take a lot of hard work and commitment to make the right
selection. For companies that do not have the necessary amount of time and
expertise to search and make the software selection, one method of drastically
reducing risk and greatly increasing your chance of success is by simply getting
some help from someone who has been through the selection process before.
Working with an objective consultant will enable you to focus on what it is you
do best and have the peace of mind of knowing you are not making the common
first timer mistakes. So whether you are in the very early initial stages of
gathering information, are working with a consultant, or at the very end of the
selection process and are negotiating with the vendor, hopefully the insight
delivered above will help you side-step the potential ERP selection landmines.
According to The Conference Board Survey in 2001 that interviewed executives
that attempted ERP implementations
i. 34% were very satisfied
ii. 40% of
the projects failed to achieve their business case within one year of going live
VEITS Group Contact Information
VEITS Group
877-834-8702
425 Metro
Place North, Suite 330
Dublin, OH 43017
Daniel Konstantinovsky
dkonstan@veitsgroup.com
Vishnu Raman
vraman@veitsgroup.com
Mark Vick
mvick@veitsgroup.com
According to a recent study
by Robbins-Gioia, LLC
of ERP Implementations, 51% viewed their ERP implementation as
unsuccessful